<PAGE>   1
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  ------------

                                    FORM 10-Q


[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                                       OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                 For the transition period from ______ to ______

                         Commission File Number: 0-28480

                                EDIFY CORPORATION
             (Exact name of Registrant as specified in its charter)

                    DELAWARE                            77-0250992
       (State or other jurisdiction                  (I.R.S. Employer
     of incorporation or organization)            Identification Number)

                            2840 SAN TOMAS EXPRESSWAY
                          SANTA CLARA, CALIFORNIA 95051
                    (Address of principal executive offices)

                                  ------------

                                 (408) 982-2000
              (Registrant's telephone number, including area code)

                                  ------------

Indicate by checkmark whether the Registrant: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                               (1) Yes [X] No [ ]

As of June 30, 1999, there were 17,732,800 shares of the Registrant's common
stock outstanding.


================================================================================


<PAGE>   2
EDIFY CORPORATION
FORM 10-Q
INDEX


<TABLE>
<CAPTION>
                                                                           PAGE
PART I  FINANCIAL INFORMATION                                             NUMBER
<S>                                                                       <C>
ITEM 1: Condensed Consolidated Financial Statements (Unaudited)

        Condensed Consolidated Balance Sheets as of
        June 30, 1999 and December 31, 1998 ...........................     3

        Condensed Consolidated Statements of Operations for
        the three and six months ended June 30, 1999 and 1998 .........     4

        Condensed Consolidated Statements of Cash Flows for
        the six months ended June 30, 1999 and 1998 ...................     5

        Notes to Condensed Consolidated Financial Statements ..........     6

ITEM 2: Management's Discussion and Analysis of Financial
        Condition and Results of Operations ...........................    10

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk ....    22

PART II OTHER INFORMATION

ITEM 4: Submission of Matters to a Vote of Security Holders ...........    23

ITEM 6: Exhibits and Reports on Form 8-K...............................    24

Signatures.............................................................    26
</TABLE>


                                     - 2 -


<PAGE>   3
PART I:  FINANCIAL INFORMATION
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


                                EDIFY CORPORATION


                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                              JUNE 30,  December 31,
                                                               1999        1998
                                                            ----------- -----------
<S>                                                         <C>         <C>
                               ASSETS
Current assets:
    Cash, cash equivalents and short-term investments ...   $    30,796 $    34,837
    Accounts receivable, net ............................        20,167      22,629
    Prepaid expenses and other current assets ...........         2,904       1,920
                                                            ----------- -----------

         Total current assets ...........................        53,867      59,386
Property and equipment, net .............................         7,059       7,329
Other assets ............................................         1,301         289
                                                            ----------- -----------

         Total assets ...................................   $    62,227 $    67,004
                                                            =========== ===========


                LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable ....................................   $     3,689 $     2,744
    Current installments of capital lease obligations ...            92         257
    Accrued expenses ....................................         8,853       7,749
    Unearned revenue ....................................         5,484       4,475
                                                            ----------- -----------
         Total current liabilities ......................        18,118      15,225
                                                            ----------- -----------
Deferred rent ...........................................            68          50
Capital lease obligations, excluding current installments             1          20
Commitments and contingencies
Stockholders' equity:
    Common stock ........................................            18          17
    Additional paid-in capital ..........................        70,358      69,070
    Deferred compensation and other .....................           (23)        (63)
    Accumulated deficit .................................       (26,313)    (17,315)
                                                            ----------- -----------
         Total stockholders' equity .....................        44,040      51,709
                                                            ----------- -----------

         Total liabilities and stockholders' equity .....   $    62,227 $    67,004
                                                            =========== ===========
</TABLE>


See notes to condensed consolidated financial statements.


                                     - 3 -


<PAGE>   4
                                EDIFY CORPORATION


                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                  JUNE 30,                       JUNE 30,
                                                         --------------------------    --------------------------
                                                             1999           1998           1999           1998
                                                         -----------    -----------    -----------    -----------
<S>                                                      <C>            <C>            <C>            <C>
Net revenues:
         License ..................................      $     9,213    $     9,179    $    17,009    $    16,237
         Services and other .......................           10,959          8,682         19,128         15,382
                                                         -----------    -----------    -----------    -----------
                  Total net revenues ..............           20,172         17,861         36,137         31,619
Cost of license revenues ..........................              781            226          1,765            522
Cost of services and other revenues ...............            7,691          5,888         15,808         10,758
                                                         -----------    -----------    -----------    -----------
                  Gross profit ....................           11,700         11,747         18,564         20,339
                                                         -----------    -----------    -----------    -----------
Operating expenses:
         Product development ......................            3,178          2,884          6,362          5,418
         Sales and marketing ......................            8,663          8,056         17,229         14,840
         General and administrative ...............            2,115          1,573          3,851          2,847
         Acquisition-related expenses .............              690             --            690             --
                                                         -----------    -----------    -----------    -----------
                  Total operating expenses ........           14,646         12,513         28,132         23,105
                                                         -----------    -----------    -----------    -----------
                  Loss from operations ............           (2,946)          (766)        (9,568)        (2,766)
Interest income, net ..............................              316            504            666            984
                                                         -----------    -----------    -----------    -----------
                  Loss before income taxes ........           (2,630)          (262)        (8,902)        (1,782)
Provision for income taxes ........................               --             33             96             55
                                                         -----------    -----------    -----------    -----------
                  Net loss ........................      $    (2,630)   $      (295)   $    (8,998)   $    (1,837)
                                                         ===========    ===========    ===========    ===========

Basic net loss per share ..........................      $     (0.15)   $     (0.02)   $     (0.51)   $     (0.11)
                                                         ===========    ===========    ===========    ===========
Shares used in computing basic net loss per share .           17,698         16,997         17,638         16,884
                                                         ===========    ===========    ===========    ===========

Diluted net loss per share ........................      $     (0.15)   $     (0.02)   $     (0.51)   $     (0.11)
                                                         ===========    ===========    ===========    ===========
Shares used in computing diluted net loss per share
                                                              17,698         16,997         17,638         16,884
                                                         ===========    ===========    ===========    ===========
</TABLE>


See notes to condensed consolidated financial statements.


                                     - 4 -


<PAGE>   5
                                EDIFY CORPORATION


                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED JUNE 30,
                                                                                     --------------------------
                                                                                         1999           1998
                                                                                     -----------    -----------
<S>                                                                                  <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss ....................................................................      $     (8,998)   $    (1,837)

  Adjustments to reconcile net loss to net cash provided by (used in) operating
    activities:
    Depreciation and amortization .............................................             2,644          2,118

    Deferred rent .............................................................                18              2

    Changes in operating assets and liabilities:
      Accounts receivable .....................................................             2,462          (219)

      Prepaid expenses and other current assets ...............................             (984)          (458)

      Accounts payable ........................................................              945            705

      Accrued expenses ........................................................            1,104          1,496

      Unearned revenue ........................................................            1,009            109
                                                                                     -----------    -----------

        Net cash provided by (used in) operating activities ...................           (1,800)         1,916
                                                                                     -----------    -----------


CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment, net ....................................           (2,342)        (2,327)

  Purchases of short-term investments .........................................           (5,004)        (2,998)

  Sales and maturities of short-term investments ..............................            7,511         10,330

  Other assets ................................................................           (1,012)           (62)
                                                                                     -----------    -----------

        Net cash provided by (used in) investing activities ...................             (847)         4,943
                                                                                     -----------    -----------


CASH FLOWS FROM FINANCING ACTIVITIES
  Principal payments under capital lease obligations ..........................             (184)          (207)

  Net proceeds from repayment of shareholder note .............................                8             --

  Net proceeds from issuance of common stock ..................................            1,289          1,442
                                                                                     -----------    -----------

        Net cash provided by financing activities ...........................              1,113          1,235
                                                                                     -----------    -----------

Increase (decrease) in cash and cash equivalents ............................             (1,534)         8,094

Cash and cash equivalents at beginning of period ............................             24,198         31,790
                                                                                     -----------    -----------

Cash and cash equivalents at end of period ..................................        $    22,664    $    39,884
                                                                                     ===========    ===========


Supplemental schedule of cash flow information:
  Cash paid during the period for interest ....................................      $        13    $        49

  Cash paid during the period for taxes .......................................      $        19    $       165
</TABLE>


See notes to condensed consolidated financial statements.


                                     - 5 -


<PAGE>   6
                                EDIFY CORPORATION


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(1)     BASIS OF PRESENTATION

        The Company's unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles and,
in the opinion of management, reflect all adjustments (consisting only of normal
recurring adjustments) considered necessary to fairly state the Company's
financial position, results of operations and cash flows for the periods
presented. These consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements included in the
Company's Form 10-K for the fiscal year ended December 31, 1998. The results of
operations for the three- and six-month periods ended June 30, 1999 are not
necessarily indicative of the results to be expected for any subsequent quarter
or for the entire fiscal year ending December 31, 1999. The December 31, 1998
balance sheet was derived from audited consolidated financial statements, but
does not include all disclosures required by generally accepted accounting
principles.

(2)     NET LOSS PER SHARE

        The computation of diluted net loss per share does not include common
stock issuable under the exercise of outstanding stock options because the
inclusion of these securities would have an anti-dilutive effect. As of June 30,
1999 and 1998, there were 3,825,815 and 3,362,134 stock options outstanding with
weighted-average exercise prices of $7.40 and $9.00, respectively.

(3)     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," which provides
guidance on accounting for the costs of computer software intended for internal
use. Effective January 1, 1999, the Company adopted SOP 98-1. There was no
material change to the Company's consolidated results of operations or financial
position as a result of the adoption of SOP 98-1.

        In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-up Activities," which provides guidance on the accounting for start-up
activities, including organization costs. Effective January 1, 1999, the Company
adopted SOP 98-5. There was no material change to the Company's consolidated
results of operations or financial position as a result of the adoption of SOP
98-5.

        In December 1998, AcSEC issued SOP 98-9, "Software Revenue Recognition,
with Respect to Certain Arrangements," which requires recognition of revenue
using the "residual method" in a multiple element arrangement when fair value
does not exist for one


                                     - 6 -


<PAGE>   7
or more of the delivered elements in the arrangement. Under the "residual
method," the total fair value of the undelivered elements is deferred and
subsequently recognized in accordance with SOP 97-2. The Company will adopt SOP
98-9 on January 1, 2000. The Company does not expect a material change to its
revenue accounting as a result of the adoption of SOP 98-9.

(4)     BUSINESS COMBINATION

        On May 16, 1999, the Company entered into a definitive merger agreement
to be acquired by Security First Technologies Corporation ("Security First"), a
publicly-held Georgia-based provider of enterprise-wide internet applications
for financial institutions. Under the terms of the agreement, the Company will
be merged with and become a wholly-owned subsidiary of Security First. At the
effective time of the merger, each outstanding share of the Company's common
stock will be exchanged for 0.330969 shares of Security First common stock, and
options to purchase Company common stock will be exchanged for options to
purchase shares of Security First common stock. The exercise price and number of
shares of Company common stock subject to each Company option will be
appropriately adjusted to reflect the exchange ratio. In connection with the
merger, the Company also granted to Security First an option to purchase up to
19.9% of the outstanding shares of the Company's common stock. This option is
exercisable upon the occurrence of certain events that are specified in the
option agreement with Security First.

        The above transaction is intended to qualify as a tax-free
reorganization that will be accounted for as a purchase business combination by
Security First and is expected to be completed in the fiscal fourth quarter
ending December 31, 1999. The acquisition has been approved by the board of
directors of each company and has received early termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction
is subject to various other conditions, including the approval of the Company's
and Security First's stockholders.

        In connection with the transaction, the Company incurred
acquisition-related expenses of $690,000 for the quarter and six months ended
June 30, 1999. These costs consist primarily of legal and travel expenses
associated with the impending acquisition.

(5)     SUBSEQUENT EVENT

        On July 15, 1999, the Company sold its Employee Relationship Management
("ERM") group assets to Workscape, Inc., a privately-held provider of
internet-based employee self-service solutions, for approximately $16.0 million
in cash and the assumption of certain related liabilities of the Company. The
transaction included the sale of the Company's Employee Service System product
and related tangible and intangible assets, inventory, technology, books and
records, contracts and goodwill as well as the transfer of 42 employees from the
areas of engineering, technical support, consulting services, sales and
marketing. The Company is currently determining the resulting gain on the
transaction. In addition, Workscape will pay minimum quarterly license fees of
$625,000 for a period of two years from the date of sale in exchange for the
right to use the Company's Electronic Workforce product.


                                     - 7 -


<PAGE>   8
(6)     COMMITMENTS

        In April 1996, the Company received a letter from Lucent inviting the
Company to negotiate a license of Lucent's patents. Lucent asserted that certain
of the Company's products infringe certain of Lucent's patents and offered to
license those patents to the Company for a substantial payment. In November
1997, the Company received a letter from Lucent in which Lucent made similar
assertions with respect to other patents it holds. In November 1998, the Company
entered into an agreement with Lucent (the "Lucent Settlement"), under which
each party released the other from claims of past infringement and settled their
patent disputes. Under the Lucent Settlement, Edify paid Lucent a one-time fee
of $5 million, which was recorded as intellectual property settlement expense in
1998. The one-time settlement fee released the Company from all claims, demands
and rights of action which Lucent may have on account of any infringement or
alleged infringement of any of Lucent's patents that are covered by the Lucent
Settlement. In connection with the Lucent Settlement, the Company will pay
Lucent a minimum annual royalty fee of approximately $500,000 up to a maximum of
approximately $700,000 in each of the fiscal years from 1999 to 2004. In
addition, in fiscal years 2005 and 2006, if the Company exceeds certain revenue
targets that are specified under the Lucent Settlement, the Company will be
required to pay additional amounts.

        The Company is party to various other matters arising in the ordinary
course of its business. In the opinion of management, these proceedings will not
have a material adverse effect on the Company's financial position or results of
operations.

(7)     SEGMENT REPORTING

        The Company has adopted the provisions of SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." SFAS No. 131
establishes standards for the reporting by public business enterprises of
information about operating segments, products and services, geographic areas
and major customers. The method for determining what information to report is
based on the way management organizes the operating segments within the Company
for making operating decisions and assessing financial performance.

        The Company's chief operating decision-maker is considered to be the
Company's Chief Executive Officer ("CEO"). The CEO reviews financial information
presented on a consolidated basis accompanied by disaggregated information about
revenues by product and service line for purposes of making operating decisions
and assessing financial performance. The Company operates in three operating
segments: software, post-contract customer support services and application
development consulting services.

        Net revenue information regarding the Company's operating segments is as
follows (in thousands):


                                     - 8 -


<PAGE>   9

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED JUNE 30,      Six Months Ended June 30,
                                            ---------------------------      -------------------------
                                                 1999         1998                1999         1998
                                            ------------  ------------       ------------  -----------
<S>                                         <C>           <C>                <C>           <C>
Net revenues:
     Software .........................      $     9,213  $     9,179         $    17,009  $    16,237
     Application development consulting            7,019        5,670              11,531        9,586
     Post-contract customer support ...            3,337        2,489               6,283        4,539
     Other ............................              603          523               1,314        1,257
                                             -----------  -----------         -----------  -----------
          Total net revenues ..........      $    20,172  $    17,861         $    36,137  $    31,619
                                             ===========  ===========         ===========  ===========
</TABLE>


        The Company's export sales are principally in Europe and Asia/Pacific.
In each of the three and six months ended June 30, 1999 and 1998, 6% or less of
the Company's total net revenues were derived from international sales.
Accordingly, the Company does not produce reports that measure performance of
revenues by geographic region.

        The Company evaluates the performance of its operating segments based on
revenues only. The Company does not assess the performance of its segments on
other measures of income or expense, such as depreciation and amortization,
operating income or net income. In addition, as the Company's assets are
primarily located in its corporate office in the United States and not allocated
to any specific segment, the Company does not produce reports that measure the
performance based on any asset-based metrics. Therefore, segment information is
presented only for revenues.

        No single customer accounted for greater than 10% of revenues in any
period presented.


                                     - 9 -


<PAGE>   10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


        This Form 10-Q contains forward-looking statements that involve risks
and uncertainties. For example, statements including terms such as we "expect,"
"believe" or "anticipate" are forward-looking statements. Forward-looking
statements are subject to risks and uncertainties. Investors should be aware
that our actual results may differ materially from those indicated by these
statements. Factors that could cause or contribute to such differences include
those set forth below in "Factors That May Affect Future Operating Results" as
well as those discussed in the "Business Risks" section included in our Form
10-K for the fiscal year ended December 31, 1998.

EVENTS OCCURRING AFTER JUNE 30, 1999

        On July 15, 1999, we sold our Employee Relationship Management ("ERM")
group assets to Workscape, Inc., a privately-held provider of internet-based
employee self-service solutions, for approximately $16.0 million in cash and the
assumption of certain related liabilities of Edify. The transaction included the
sale of our Employee Service System product and related tangible and intangible
assets, inventory, technology, books and records, contracts and goodwill as well
as the transfer of 42 employees from the areas of engineering, technical
support, consulting services, sales and marketing. We are currently determining
the resulting gain on the transaction. In addition, Workscape will pay minimum
quarterly license fees of $625,000 for a period of two years from the date of
sale in exchange for the right to use our Electronic Workforce product.

RESULTS OF OPERATIONS

NET REVENUES

        On July 15, 1999, we sold our ERM group assets, including the Employee
Service System software, to Workscape. Revenues from our ERM business accounted
for 15.1% of total net revenues for the quarter ended June 30, 1999 as compared
to 33.6% for the comparable 1998 quarter and 20.2% of total net revenues for the
six months ended June 30, 1999 as compared to 33.1% for the comparable 1998
period. Consequently, the following comparisons should not be relied upon as
indicators of future performance.

        Total net revenues were $20.2 million for the quarter ended June 30,
1999 as compared to $17.9 million for the comparable 1998 quarter, representing
an increase of 12.9%. For the six months ended June 30, 1999, total net revenues
were $36.1 million, an increase of 14.3% as compared to $31.6 million for the
same period a year ago. We derive our revenues principally from software
licenses and fees for services, which generally are charged separately. Revenues
are recorded net of reserves for potential product returns. As a result of the
sale of our ERM group assets, total net revenues in the future will include


                                     - 10 -


<PAGE>   11
software sales and service fees related to our Electronic Workforce and
Electronic Banking System applications only, and consequently, overall revenues
in future periods may decline.

        In the three- and six-month periods ended June 30, 1999 and 1998,
international sales accounted for 6% or less of our total net revenues. In order
to increase sales opportunities and profitability, over time, we intend to
expand our international operations and enter additional international markets.
We have committed and continue to commit significant management attention and
financial resources to develop our international sales and support channels. As
international operations entail a number of risks, including those associated
with product customization and regulatory compliance, we cannot assure you that
our expansion will be successful.

        LICENSE REVENUES. License revenues were $9.2 million in each of the
quarters ended June 30, 1999 and 1998. For the six months ended June 30, 1999,
license revenues were $17.0 million as compared to $16.2 million for the
comparable period in 1998. License revenues for the comparable quarters remained
relatively flat due to the impending sale of the ERM group assets on July 15,
1999. Purchases of human resource self-service applications that would have
normally closed in 1999 were delayed due to customers' concerns over the
uncertain future of our ERM business. Excluding license revenues associated with
ERM applications, license revenues were $9.1 million and $16.2 million for the
three- and six-month periods ended June 30, 1999, respectively, as compared to
$6.6 million and $11.4 million, for the comparable 1998 periods. The increase in
license revenues was due to an increase in unit volume as a result of the
market's growing awareness and acceptance of Electronic Banking System and
Electronic Workforce Release 6, which incorporates speech-recognition
functionality. We do not believe that the historical growth rates of license
revenues are indicative of future results.

        SERVICES AND OTHER REVENUES. Services and other revenues consist
primarily of fees from consulting, post-contract customer support and, to a
lesser extent, education services. Services and other revenues were $11.0
million for the quarter ended June 30, 1999 as compared to $8.7 million for the
comparable 1998 quarter. For the six months ended June 30, 1999, services and
other revenues were $19.1 million as compared to $15.4 million for the
comparable period in 1998. Services and other revenues as a percentage of total
net revenues increased to 54.3% for the quarter ended June 30, 1999 from 48.6%
for the quarter ended June 30, 1998, and increased to 52.9% for the six months
ended June 30, 1999 from 48.6% for the comparable 1998 period. Excluding
revenues related to ERM applications, services and other revenues for the three-
and six-month periods ended June 30, 1999 amounted to $8.0 million and $12.7
million, respectively, as compared to $5.2 million and $9.8 million for the
comparable 1998 periods. The increase in services and other revenues in absolute
dollars occurred primarily due to increased demand for consulting services and
post-contract customer support associated with the increased installed base of
our software. The increase in services and other revenues as a percentage of
total net revenues is due to decreased unit volume of the Electronic Service
System product as a result of the sale of the ERM group assets. As the services
organization continued to work on ERM projects already underway, ERM services
revenues were relatively unaffected by the asset sale. We do not expect
historical growth rates of our services revenues to be sustainable. In addition,
overall


                                     - 11 -


<PAGE>   12
gross profit margins may decrease if services and other revenues becomes a
higher percentage of total net revenues.

COST OF REVENUES

        COST OF LICENSE REVENUES. Cost of license revenues consists primarily of
the cost of product media, product duplication, documentation and royalties paid
to third parties under technology licenses. On July 15, 1999, we sold our ERM
group assets to Workscape. Consequently, the following comparisons should not be
relied upon as indicators of future performance. Cost of license revenues was
$781,000, or 8.5% of the related license revenues, for the quarter ended June
30, 1999, and $226,000, or 2.5% of the related license revenues, for the quarter
ended June 30, 1998. For the six months ended June 30, 1999, cost of license
revenues was $1.8 million, or 10.4% of the related license revenues, as compared
to $522,000, or 3.2% of the related license revenues, for the comparable 1998
period. The increase in the cost of license revenues in absolute dollars and as
a percentage of license revenues for the comparable quarters was due primarily
to additional costs for the increased number of software sales that incorporate
third-party speech-recognition products. As we expect to continue to use
third-party technologies as part of our internet and voice e-Commerce solutions,
we anticipate that the cost of license revenues as a percentage of license
revenues for fiscal year 1999 will exceed fiscal year 1998 levels.

        COST OF SERVICES AND OTHER REVENUES. Cost of services and other revenues
consists primarily of personnel-related costs and fees for third-party
consultants incurred in providing consulting, post-contract customer support and
education services to customers. On July 15, 1999, we sold our ERM group assets
and transferred 27 related services personnel to Workscape. Consequently, the
following comparisons should not be relied upon as indicators of future
performance. Cost of services and other revenues was $7.7 million, or 70.2% of
the related services and other revenues, for the quarter ended June 30, 1999,
and $5.9 million, or 67.8% of the related services and other revenues, for the
quarter ended June 30, 1998. For the six months ended June 30, 1999, cost of
services and other revenues was $15.8 million, or 82.6% of the related services
and other revenues, as compared to $10.8 million, or 69.9% of the related
services and other revenues, for the comparable 1998 period. The increase in
absolute dollars for the comparable quarters was due primarily to the increase
in personnel-related costs as we continued to expand our consulting and customer
support organizations. The decrease in gross profit margins resulted primarily
from a mismatch between customer service demands and specific service resources
available as well as an increase in non-billable service work to complete
several significant projects primarily during the first quarter of 1999. The
cost of services and other revenues as a percentage of services and other
revenues may vary between periods due to the amount and mix of services that we
provide and to varying levels of expenditures to build the services
organization. Any significant decline in the demand for our consulting services
would lead to a decline in our revenues and, as a result of the
under-utilization of consulting personnel, in our gross profit and results of
operations.


                                     - 12 -


<PAGE>   13
PRODUCT DEVELOPMENT

        On July 15, 1999, we sold our ERM group assets and transferred seven
related engineers to Workscape. Consequently, the following comparisons should
not be relied upon as indicators of future performance. Product development
expenses were $3.2 million, or 15.8% of total net revenues, for the quarter
ended June 30, 1999, and $2.9 million, or 16.1% of total net revenues, for the
quarter ended June 30, 1998. For the six months ended June 30, 1999, product
development expenses were $6.4 million, or 17.6% of total net revenues, as
compared to $5.4 million, or 17.1% of total revenues, for the comparable 1998
period. Product development expenses consist primarily of salaries and other
related expenses for research and development personnel, as well as the cost of
facilities and depreciation of capital equipment. The increase in absolute
dollars for the comparable three- and six-month periods was attributable
primarily to increased staffing related to ongoing development and enhancements
of Electronic Workforce and our application products, Electronic Banking System
and Employee Service System. The decrease in product development expenses as a
percentage of total net revenues for the comparable quarters was due to the
increase in total net revenues. We believe that we will continue to devote
substantial resources to research and development in order to remain
competitive, and therefore, we expect that product development expenses will not
decline significantly in absolute dollars or as a percentage of total net
revenues.

        In accordance with SFAS No. 86, we expect to capitalize eligible
computer software development costs upon the achievement of technological
feasibility, subject to net realizable value considerations. We have defined
technological feasibility as completion of a working model. To date, we believe
our process for developing software was essentially completed concurrently with
the establishment of technological feasibility and, accordingly, no software
development costs have been capitalized in the accompanying consolidated balance
sheet.

SALES AND MARKETING

        On July 15, 1999, we sold our ERM group assets and transferred eight
related sales and marketing personnel to Workscape. Consequently, the following
comparisons should not be relied upon as indicators of future performance. Sales
and marketing expenses were $8.7 million, or 42.9% of total net revenues, for
the quarter ended June 30, 1999, and $8.1 million, or 45.1% of total net
revenues, for the quarter ended June 30, 1998. For the six months ended June 30,
1999, sales and marketing expenses were $17.2 million, or 47.7% of total
revenues, as compared to $14.8 million, or 46.9% of total net revenues, for the
comparable 1998 period. Sales and marketing expenses consist primarily of
salaries and commissions earned by sales and marketing personnel and promotional
expenses. The increase in absolute dollars was due primarily to the development
of our sales management team, the expansion of our international sales
operations and increased promotional spending to support new product launches
and corporate campaigns. The decrease in sales and marketing expenses as a
percentage of total net revenues for the comparable quarters was due to the
increase in total net revenues. We expect to continue to expand our
international operations and strengthen the effectiveness of our field sales and
indirect distribution channels. Therefore, we anticipate sales and marketing
expenditures will not


                                     - 13 -


<PAGE>   14
decline significantly in absolute dollars. Furthermore, we expect sales and
marketing expenses as a percentage of total net revenues to fluctuate between
periods due to varying levels of expenditures required to build the sales and
marketing organizations.

GENERAL AND ADMINISTRATIVE

        General and administrative expenses were $2.1 million, or 10.5% of total
net revenues, for the quarter ended June 30, 1999, and $1.6 million, or 8.8% of
total net revenues, for the quarter ended June 30, 1998. For the six months
ended June 30, 1999, general and administrative expenses were $3.9 million, or
10.7% of total net revenues, as compared to $2.8 million, or 9.0% of total net
revenues, for the comparable 1998 period. General and administrative expenses
consist primarily of salaries and other related expenses of administrative,
executive and financial personnel and outside professional fees. The increase in
absolute dollars and as a percentage of total net revenues for the comparable
periods was attributable primarily to the addition of a business development
function in 1999 and a general increase in other infrastructure costs to support
the growth of our business. We expect to continue to expand our staffing and
other areas related to infrastructure and, therefore, we anticipate that general
and administrative expenses will increase in absolute dollars in the future. As
no administrative, executive or financial personnel transferred to Workscape as
a result of the sale of our ERM group assets, general and administrative
expenses as a percentage of total net revenues may increase in future periods.

ACQUISITION-RELATED EXPENSES

        On May 16, 1999, we entered into a definitive merger agreement to be
acquired by Security First Technologies Corporation, a publicly-held
Georgia-based provider of enterprise-wide internet applications for financial
institutions. As a result, acquisition-related expenses, which amounted to
$690,000 for the quarter and six months ended June 30, 1999, consists primarily
of legal and travel expenses associated with the impending acquisition. As we
expect the transaction to close in the fiscal fourth quarter ending December 31,
1999, we anticipate that acquisition-related expenses will increase in absolute
dollars and as a percentage of total net revenues in the near term.

INTEREST INCOME, NET

        Interest income, net was $316,000 for the quarter ended June 30, 1999 as
compared to $504,000 for the quarter ended June 30, 1998. For the six months
ended June 30, 1999, interest income, net was $666,000 as compared to $984,000
for the comparable 1998 period. For the three- and six-month periods ended June
30, 1999 and 1998, interest income, net consists primarily of interest earned
from our cash, cash equivalents and short-term investments. The decrease in
absolute dollars is due to decreases in the average investment balance and
average interest rate in the comparable periods. We expect interest income, net
to increase as a result of the investment of proceeds of approximately $16.0
million, which we received in July 1999 from the sale of our ERM group assets.


                                     - 14 -


<PAGE>   15
PROVISION FOR INCOME TAXES

        There was no provision for income taxes for the quarter ended June 30,
1999 as compared to the provision for income taxes of $33,000 for the quarter
ended June 30, 1998. For the six months ended June 30, 1999, the provision for
income taxes was $96,000 as compared to $55,000 for the comparable 1998 period.
No provision was recorded in the quarter ended June 30, 1999 as we incurred a
net operating loss during the quarter. The provision for income taxes for the
six-month period ended June 30, 1999 consists primarily of foreign withholding
taxes whereas the balance for the three- and six-month periods ended June 30,
1998 represents primarily state income and foreign withholding taxes.

LIQUIDITY AND CAPITAL RESOURCES

        At June 30, 1999, our cash, cash equivalents and short-term investments
totaled $30.8 million. At June 30, 1999, we also had available an $8.0 million
unsecured revolving bank line of credit agreement which expires in December 1999
and contains certain financial covenants, with which we were in compliance.
Borrowings accrue interest at the bank's prime rate. As of June 30, 1999, there
were no borrowings outstanding under this line of credit. In addition, on July
15, 1999, we received approximately $16.0 million from the sale of our ERM group
assets to Workscape.

        For the six months ended June 30, 1999, operating activities used cash
of $1.8 million, resulting primarily from the net loss of $9.0 million, which
was offset by depreciation and amortization of $2.6 million, a decrease in
accounts receivable of $2.5 million and an increase in accounts payable and
accrued expenses of $2.0 million. Investing activities used cash of $847,000
from the purchase of property and equipment of $2.3 million and an increase in
other assets of $1.0 million, which was offset by the net sale and maturity of
$2.5 million of short-term investments. Net cash generated from financing
activities of $1.1 million was related primarily to proceeds from the issuance
of common stock through our Employee Stock Purchase Plan.

        At June 30, 1999, our working capital was $35.7 million. We have no
significant capital spending or purchase commitments other than normal purchase
commitments, commitments under our facilities and capital leases and our
commitment to pay royalty fees under our settlement with Lucent (see Note 6 of
the Condensed Consolidated Financial Statements). On July 15, 1999, we sold our
ERM group assets to Workscape for approximately $16.0 million in cash and the
assumption of certain related liabilities of Edify. In addition, Workscape has
agreed to pay a minimum quarterly license fee of $625,000 for a period of two
years from the date of sale in exchange for the right to use our Electronic
Workforce product. We believe that our working capital, together with our bank
line of credit, the initial proceeds from the sale of our ERM group assets and
anticipated cash flows from operations, if any, will be sufficient to meet our
working capital and capital expenditure requirements for at least the next
twelve months.


                                     - 15 -


<PAGE>   16
YEAR 2000

        Many currently installed computer systems and software products are
coded to accept two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As the year 2000 approaches, many companies may need to
upgrade their computer systems and software to comply with such "Year 2000"
requirements.

        We are currently taking steps to address Year 2000 issues in the
following three areas: (1) our products; (2) internal systems; and (3) readiness
of third-party vendors and business partners. We have assigned a Year 2000
project team to develop and implement the Year 2000 readiness effort for our
domestic and international operations. The project has executive sponsorship and
is regularly reviewed by senior management, the Board of Directors and the Audit
Committee.

        We have designed and tested our current products to be Year 2000
compliant. However, since we cannot anticipate all customer situations,
particularly those involving third-party products, we may see an increase in
warranty and other claims as a result of the Year 2000 transition. As such, the
impact of customer claims could have a material adverse impact on our business,
financial condition and results of operations.

        Our internal systems include both information technology systems such as
financial and order entry systems and non-information technology systems such as
telephones and facilities. In August 1998, we completed the installation of a
Year 2000 compliant enterprise resource planning (ERP) system, which includes
our order entry, project accounting and financial systems. In addition, during
the second quarter of 1999, we completed a comprehensive inventory and
evaluation of all desktop systems. As a result, we expect to resolve Year 2000
compliance issues that have been identified substantially through normal
replacement and upgrades by September 1999, with ongoing maintenance and support
activity continuing throughout the rest of fiscal year 1999 and early fiscal
year 2000. The remaining costs of remediation are not expected to be material to
our financial condition or results of operations. However, if we identify
significant new non-compliance issues, our business, financial condition and
results of operations could be materially adversely affected.

        In December 1998, we completed the process of sending detailed
questionnaires to critical suppliers and business partners to certify Year 2000
compliance. Where practicable, we will attempt to mitigate our risk with respect
to the failure of suppliers and business partners to be Year 2000 ready.
However, such failures remain a possibility and could have an adverse impact on
our business, financial condition and results of operations.

        We have budgeted approximately $300,000 for investigating and remedying
issues related to Year 2000 compliance involving software or systems used in our
internal operations. Costs that have already been incurred to replace and
upgrade software and systems in our ordinary course of business are excluded
from the estimated budget. To date, we have incurred expenditures of
approximately $171,000 directly associated with Year 2000 issues. These costs
were incurred primarily for outside consultants. We do not track


                                     - 16 -


<PAGE>   17
internal Year 2000 compliance costs, which consist principally of
payroll-related costs for our information systems group.

        While we have dedicated substantial resources towards attaining Year
2000 compliance, our Year 2000 compliance program may not be completed on a
timely basis. In addition, we cannot assure you that there will not be
interruption of operations or other limitations of system functionality or that
we will not incur substantial costs to avoid such limitations. Any failure to
effectively monitor, implement or improve our operational, financial, management
and technical support systems could have a material adverse effect on our
business, financial condition and results of operations. Furthermore, we believe
that Year 2000 issues may affect the purchasing patterns of customers and
potential customers as companies may expend significant resources to correct or
patch their current software systems for Year 2000 compliance. These
expenditures may result in reduced funds available to purchase software products
such as those offered by us, which could have a material adverse effect on our
business, financial condition and results of operations. In addition, even if
our products are Year 2000 compliant, other systems or software used by our
customers may not be Year 2000 compliant. The failure of such non-compliant
third-party software or systems could affect the perceived performance of our
products, which could have a material adverse effect on our business, financial
condition and results of operations.

        The most likely worst case scenarios would include hardware failure and
the failure of infrastructure services provided by government agencies, systems
vendors and other third parties. We have developed a company-wide infrastructure
contingency plan for high to medium risk areas such as electricity, voicemail
and telephones, network services and devices, internet services, servers and
application services. We will be conducting tests to evaluate our contingency
plans in September 1999. Despite our efforts to reduce the risks associated with
the Year 2000, we cannot assure you that we can anticipate or provide for all
contingencies.


                                     - 17 -


<PAGE>   18
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

        Except for the historical information contained in this Form 10-Q, the
matters discussed herein are forward-looking statements. These forward-looking
statements concern matters which include, but are not limited to, the
sustainability of historical revenue growth rates, our expected mix of revenues,
expected gross margins on license revenues and services and other revenues,
expected operating expense levels, our liquidity and capital needs and year 2000
compliance. These matters involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Investors should be aware that revenue levels and results of
operations achieved during the quarter and six months ended June 30, 1999 do not
necessarily indicate future financial results. We may be unable to achieve or
sustain profitability or experience growth in revenues in any future quarter.
Our revenues, margins and operating results have fluctuated in the past, and are
expected to continue to fluctuate in future periods due to factors including,
but not limited to, the following: demand for our products; new products and
product enhancements; sales force initiatives; transitions to new products; the
mix of products and services sold; the mix of distribution channels through
which our products are sold; customer order deferrals in anticipation of new
products or product enhancements; purchasing patterns of value added resellers
and customers; hiring and expense budgeting decisions and competitive conditions
in the industry. In particular, we plan to increase our operating expenses to
expand our sales and marketing operations, expand our distribution channels,
expand our international operations, fund greater levels of product development,
broaden our consulting services and customer support capabilities and increase
our administrative infrastructure. A relatively high percentage of our expenses
is fixed in the short term as our expense levels are based, in part, on our
expectations as to future revenues. If revenues fall below expectations,
expenditure levels could be disproportionately high as a percentage of total net
revenues, and operating results would be immediately and adversely affected.

        On July 15, 1999, we sold our Employee Relationship Management ("ERM")
group assets to Workscape, Inc., a privately-held provider of internet-based
employee self-service solutions, for approximately $16.0 million in cash and the
assumption of certain related liabilities of Edify. The transaction included the
sale of our Employee Service System product and related tangible and intangible
assets, inventory, technology, books and records, contracts and goodwill as well
as the transfer of 42 employees from the areas of engineering, technical
support, consulting services, sales and marketing. Consequently, our future
operating results depend upon the market acceptance of our Electronic Workforce
and Electronic Banking System applications. To the extent that the market does
not accept these products, our business, operating results and financial
condition will be materially and adversely affected. Furthermore, as no
administrative, executive or financial personnel transferred to Workscape,
general and administrative expenses as a percentage of total net revenues may
increase in future periods.

        We historically have operated with little backlog because we generally
ship products as orders are received. As a result, license revenues in any
quarter depend on the volume and timing of, and our ability to fill, orders
received in that quarter. Individual orders for our


                                     - 18 -


<PAGE>   19
products typically are for relatively large dollar amounts. We also believe the
purchase of our products is relatively discretionary and generally involves a
significant commitment of capital resources. Therefore, any downturn in any
potential customer's business, or any loss or delay of individual orders for any
reason, could have a significant impact on our revenues and quarterly results.
In addition, because we typically recognize a substantial portion of our total
revenue from transactions booked and shipped in the last weeks, or even days, of
the quarter, the magnitude of quarterly fluctuations may not become evident
until very late in a particular quarter. Revenues are difficult to forecast
because the market for our products is rapidly evolving.

        Based upon the above factors, we believe that our quarterly revenues,
expenses and operating results could vary significantly in the future and that
investors should not rely upon period-to-period comparisons as indications of
future performance. We may not be able to grow in future periods, sustain our
level of total net revenues or increase or sustain our rate of revenue growth on
a quarterly or annual basis. It is likely that, in some future quarters, our
operating results will fall below the expectations of stock market analysts and
investors, and consequently, the price of our common stock may decline.

        On May 16, 1999, we entered into a definitive merger agreement to be
acquired by Security First Technologies Corporation. Under the terms of the
agreement, we will be merged with and become a wholly-owned subsidiary of
Security First. At the effective time of the merger, each outstanding share of
Edify common stock will be exchanged for 0.330969 shares of Security First
common stock, and options to purchase Edify common stock will be exchanged for
options to purchase shares of Security First common stock. In connection with
the merger, we also granted to Security First an option to purchase up to 19.9%
of the outstanding shares of our common stock. This option is exercisable upon
the occurrence of certain events that are specified in our option agreement with
Security First. Our intended business combination with Security First may result
in difficulties in assimilating or separating operations, services, products and
personnel, the diversion of management's attention from other business concerns,
the disruption of our business, entry into markets into which we have little or
no direct prior experience, the potential loss of key employees and the
potential loss of key distributor, supplier or other business partner
relationships. We cannot assure you that we will succeed in overcoming these or
any other significant risks encountered during the imminent integration process.

        Our future success will depend on our ability to develop, sell,
implement and support new software products and enhancements of our current
products on a timely basis. In December 1998, we shipped Electronic Banking
Release 3, which incorporates end-to-end support for online bill presentment and
payment and the industry's first internet banking module designed specifically
for commercial banks' small business customers. In addition, in February 1999,
we introduced Electronic Workforce Release 6, which contains speech-recognition
capabilities and software-only fax solution. Because these products are still
relatively new, many customers licensing these versions have not yet fully
deployed these products and undetected errors may remain in these versions. The
existence of any such errors may delay the release of future versions and
adversely affect the acceptance of these products, either of which could have a
material adverse effect on our business, operating results and financial
condition. Furthermore, we cannot assure you that we will be able to


                                     - 19 -


<PAGE>   20
respond to changing customers needs, competition, technological developments and
emerging industry standards and continue to develop new versions of these
products successfully or in a timely manner.

        In April 1996, we received a letter from Lucent inviting us to negotiate
a license of Lucent's patents. Lucent asserted that some of our products
infringe some of Lucent's patents and offered to license those patents to us for
a substantial payment. In November 1997, we received a letter from Lucent in
which Lucent made similar assertions with respect to other patents it holds. In
November 1998, we entered into an agreement with Lucent, under which each party
released the other from claims of past infringement and settled our patent
disputes. Under the settlement agreement, we paid Lucent a one-time fee of $5
million in 1998. The one-time settlement fee released us from all claims,
demands and rights of action which Lucent may have on account of any
infringement or alleged infringement of any of Lucent's patents that are covered
by the settlement agreement. In connection with the settlement agreement, we
will pay Lucent a minimum annual royalty fee of approximately $500,000 up to a
maximum of approximately $700,000 in each of the fiscal years from 1999 to 2004.
In addition, in fiscal years 2005 and 2006, if we exceed certain revenue targets
that are specified under the settlement agreement, we will be required to pay
additional amounts.

        In the future, we may receive additional communications from other
parties asserting that our products, trademarks or other proprietary rights
require a license of intellectual property rights or infringe, or may infringe,
on their property rights. As the number of software products in the industry
increases, and the functionality of these products further overlaps, we believe
that software developers may become increasingly subject to infringement claims.
Any such claims, with or without merit, could be time consuming, result in
costly litigation, cause product shipment delays or require us to enter into
royalty or licensing agreements. If required, royalty or licensing agreements
with other parties may be unavailable on terms acceptable to us, or at all,
which could have a material adverse effect on our business, financial condition
and results of operations. In addition, we may initiate claims or litigation
against third parties for infringement of our proprietary rights or to validate
our proprietary rights. Litigation to validate any claims could result in
significant expense to us and divert the efforts of our technical and management
personnel from productive tasks, whether or not such litigation is determined in
our favor. If we receive an adverse ruling in any litigation, we may be required
to pay substantial damages, discontinue the use and sale of infringing products,
expend significant resources to develop non-infringing technology or obtain
licenses to infringing technology. Our failure to develop or license a
substitute technology could have a material adverse effect on our business,
financial condition and results of operations.

        An integral part of our strategy is to develop multiple distribution
channels, including a field sales force, VARs and OEMs. We intend to increase
our reliance on third-party distribution partners in the future. We are
expending and intend to continue to expend significant resources to develop the
VAR channel. VARs and OEMs are not, however, subject to any minimum purchase or
resale requirements and can cease marketing our products at any time. Some VARs
and OEMs may offer competing products that they produce or that are produced by
third parties. We cannot assure you that our existing VARs will continue to
provide the level of services and technical support necessary to provide a


                                     - 20 -


<PAGE>   21
complete self service solution to our customers, that they will transition
smoothly to sales of new products or enhancements of existing products or that
they will not emphasize their own or third-party products to the detriment of
our products. The loss of VARs, the failure of such parties to perform under
agreements with us or our inability to attract and retain new VARs with the
technical, industry and application expertise required to market our products
successfully in the future could have a material adverse effect on our business,
financial condition and results of operations. If we increase our sales through
VARs, those sales will be at discounted rates, and our revenue for each VAR sale
will be less than if we had licensed the same products to the customer directly.

        In addition to the conditions discussed above, other factors that could
cause actual results to differ materially include the following: our ability to
deliver on time, and market acceptance of, new products or upgrades of existing
products; the timing of, or delay in, large customer orders; continued
availability of technology and intellectual property license rights; risks
associated with global operations; general economic conditions; and the
"Business Risks" listed from time to time in reports that we file with the U.S.
Securities and Exchange Commission, including but not limited to our Form 10-K
for the fiscal year ended December 31, 1998.


                                     - 21 -


<PAGE>   22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK DISCLOSURES

        The following discussion about our market risk disclosures contains
forward-looking statements. Forward-looking statements are subject to risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements. We are exposed to market risk related to changes
in interest rates and foreign currency exchange rates. We do not have derivative
financial instruments for hedging, speculative or trading purposes.

INTEREST RATE SENSITIVITY

        We maintain a short-term investment portfolio consisting mainly of
income securities with an average maturity of less than one year. These
available-for-sale securities are subject to interest rate risk and will fall in
value if market interest rates increase. We have the ability to hold our fixed
income investments until maturity, and therefore, we do not expect a sudden
change in market interest rates on our securities portfolio to affect our
operating results or cash flows significantly.

        Our cash equivalents and short-term investments are classified as
available-for-sale. Gross unrealized gains and losses were not significant as of
June 30, 1999.

        The following table presents the principal amounts and related
weighted-average yields for our fixed rate investment portfolio (in thousands,
except average yields):


<TABLE>
<CAPTION>
                                                                          CARRYING      Average
                                                                           AMOUNT        Yield
                                                                         -----------   ----------
<S>                                                                      <C>           <C>
Cash equivalents:
         Commercial paper .........................................      $    10,080         5.12%
         Government agency securities .............................            5,383         5.03%
         Money market funds .......................................            4,615         4.74%
                                                                         -----------
                  Total cash equivalents ..........................           20,078         5.01%
Short-term investments:
         Government agency securities .............................            5,076         5.11%
         Corporate bonds ..........................................            3,056         5.18%
                                                                         -----------
                  Total short-term investments ....................            8,132         5.14%
                                                                         -----------
                  Total cash equivalents and short-term investments      $    28,210         5.05%
                                                                         ===========
</TABLE>


                                     - 22 -


<PAGE>   23
PART II. OTHER INFORMATION


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        (a)     We held our Annual Meeting of Stockholders on May 26, 1999.

        (b)     See (c) below.

        (c)     Our stockholders voted upon the following matters:

                (i)     Election of directors. All nominees were elected, with
                        the votes indicated below:


<TABLE>
<CAPTION>
Name                               Votes For           Votes Withheld
----                               ---------           --------------
<S>                                <C>                 <C>
Jeffrey M. Crowe                   16,230,038              262,493
Stephen M. Berkley                 16,261,414              231,117
Kelly D. Conway                    16,260,860              231,671
Tench Coxe                         16,261,264              231,267
Donald R. Hollis                   16,257,810              234,721
Stewart A. Schuster                16,261,264              231,267
</TABLE>


                (ii)    Approval of an amendment to the 1996 Equity Incentive
                        Plan to increase the number of shares of Common Stock
                        reserved for issuance thereunder by 850,000 shares, from
                        3,525,000 shares to 4,375,000 shares. 7,349,955 votes
                        were cast in favor of the amendment, 3,888,130 votes
                        were cast against and there were 14,493 abstentions and
                        5,239,953 broker non-votes.

                (iii)   Approval of an amendment to the 1996 Employee Stock
                        Purchase Plan to increase the number of shares of Common
                        Stock reserved for issuance thereunder by 750,000
                        shares, from 900,000 shares to 1,650,000 shares and to
                        provide for an automatic increase each year in the pool
                        of shares reserved for issuance equal to 2% of the total
                        shares outstanding at the end of our fiscal year
                        provided that the annual increase will in no event
                        exceed 1,650,000 shares per year. 10,406,261 votes were
                        cast in favor of the amendment, 832,224 votes were cast
                        against and there were 14,093 abstentions and 5,239,953
                        broker non-votes.

                (iv)    Approval of an amendment to the 1996 Directors Stock
                        Option Plan to increase the number of shares of Common
                        Stock reserved for issuance thereunder by 50,000 shares,
                        from 175,000 shares to 225,000 shares. 10,311,720 votes
                        were cast in favor of the amendment, 925,575 votes


                                     - 23 -


<PAGE>   24
                        were cast against and there were 15,283 abstentions and
                        5,239,953 broker non-votes.

                (v)     Ratification of selection of independent auditors. The
                        stockholders ratified the appointment of KPMG LLP as our
                        independent auditors to perform the audit of our
                        financial statements for the year ending December 31,
                        1999. 16,439,142 votes were cast in favor of the
                        amendment, 27,656 votes were cast against and there were
                        25,733 abstentions and zero broker non-votes.

        (d)     Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)     The following exhibits are being filed as part of this Report:

                2.01    Asset Acquisition Agreement dated as of May 25, 1999,
                        among Edify Corporation and Workscape, Inc. (1) *

                2.02    Closing Agreement dated as of July 15, 1999, among Edify
                        Corporation and Workscape, Inc. (1) *

                2.03    Agreement and Plan of Merger, dated as of May 16, 1999
                        by and among Securities First Technologies Corporation,
                        Sahara Strategy Corporation and Edify Corporation (2)

                2.04    Option Agreement, dated as of May 16, 1999, between
                        Edify Corporation and Securities First Technologies
                        Corporation (3)

                4.01    Form of Edify Stockholder Agreement, dated as of May 16,
                        1999 (included as Exhibit C of Exhibit 2.03) (4)


----------

        *       Registrant will furnish supplementally a copy of any omitted
                schedule or exhibit to the Commission upon request.

        (1)     Incorporated by reference to the Exhibit of the same number to
                Registrant's Current Report on Form 8-K, filed on July 30, 1999.

        (2)     Incorporated by reference to Exhibit 2.1 to Registrant's Current
                Report on Form 8-K, filed on May 20, 1999 (the "May 8-K").

        (3)     Incorporated by reference to Exhibit 2.2 to the May 8-K.

        (4)     Incorporated by reference to Exhibit 2.3 to the May 8-K.


                                     - 24 -


<PAGE>   25
                10.01   1996 Employee Stock Purchase Plan, as amended (5)

                10.02   1996 Equity Incentive Plan, as amended (6)

                10.03   1996 Directors Stock Option Plan, as amended (7)

                27.01   Financial Data Schedule

        (b)     Reports on Form 8-K:

                On May 20, 1999, we filed a Form 8-K to report under item 2 our
                merger agreement with Security First Technologies Corporation
                and Sahara Strategy Corporation and option agreement with
                Securities First Technologies Corporation. No financial
                statements were filed.

                On July 30, 1999, we filed a Form 8-K to report under items 2
                and 7 our asset sale agreement with Workscape, Inc. Required
                unaudited pro forma financial information with respect to the
                sale was included in the filing.

----------

        (5)     Incorporated by reference to Exhibit 4.07 to Registrant's
                Registration Statement on Form S-8 (No. 333-84077), filed on
                July 30, 1999 (the "Form S-8").

        (6)     Incorporated by reference to Exhibit 4.08 to the Form S-8.

        (7)     Incorporated by reference to Exhibit 4.09 to the Form S-8.


                                     - 25 -


<PAGE>   26
SIGNATURES


        Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                               EDIFY CORPORATION




Date: August 16, 1999          By: /s/  Stephanie A. Vinella
                                   -----------------------------------
                                   Stephanie A. Vinella
                                   Vice President of Finance and Administration,
                                   Chief Financial Officer and Secretary


                                     - 26 -


<PAGE>   27
EDIFY CORPORATION
FORM 10-Q
EXHIBIT INDEX



                                    EXHIBITS


<TABLE>
<S>               <C>
27.01             Financial Data Schedule
</TABLE>